7 Things you need to know before starting a Private Hospital

Hospital Business like any other business requires adequate planning and implementation of well laid out plans to achieve success.

Before starting a hospital, here are 7 things you need to know

1. Familiarize yourself with the regulatory requirement for setting up a hospital
Setting up a private hospital can be a bit tasking considering the regulatory requirements and the specifications of the different regulatory bodies that oversee medical practice in the country.
Create a check list of the regulations and requirement that applies to you and factor it into your business plan
Check out Regulatory Requirements for Starting a Private Hospital in Nigeria

2. Prepare your business plan
A detail business plan is crucial before starting up a hospital.
A well written business plan will highlight the following
i. The Hospital’s vision, mission and objectives
ii. Outline the short term to long term goals of the hospital
iii. Detailed description of the hospital services
iv. Marketing plan alongside the possible competition
v. The management and operation plan
vi. Financial projection and funding plan
vii. Growth plan

3. Carry out a feasibility study
Hospital business like any other business has several features in common. However, considering the unique peculiarities of hospital business, adequate feasibility study is necessary. For example, most hospital facility are designed to be single use facility and cannot be readily turned into an alternate use structure should the hospital fail or under perform.
Feasibility study before starting up a hospital will highlight
i. The growth pattern in the target location
ii. Demographic characteristics of the area
iii. The disease prevalence
iv. Types of services needed in the area
v. Health seeking behaviour of the population
vi. Competitor analysis including the number of existing hospitals in the area and their bed spaces
vii. Area bed need analysis i.e. how many beds are needed in the area? Which will ultimately determine the facility size and overall running cost

4. Review your start up plan and possible cost reduction strategies
Start-up cost for hospital can be quite enormous however, with cost effective planning and design, it is possible to reduce the overall cost without compromising standard. Measures such as outsourcing of some services, use of cost effective technologies and segmental launch of services can greatly reduce the start-up cost.

5. Focus on the 2 V’s - Value and Volume
Value in terms of quality of service and volume in terms of client drive are both important to sustainability of any hospital. Across every stage in the start-up process, through launch of service and subsequent hospital operations, hospital owners must put in place a structure that creates value and drive volume.

6. Don’t be afraid to start small
Once all basic requirements are met, don’t be afraid to start small, then gradually grow the hospital. Research has shown that facility with a Debt – Equity ratio not greater than 60:40 are very likely to be successful.
More importantly, during the process of start-up, hospital owner must put in place a structure that gives room for growth and expansion.

7. Prepare for the challenges of start-up
The primary aim of business is to make profit, however it’s been shown that it takes two to three years for a new hospital to begin to generate profit. As part of the start-up plan, there is a need to develop a strong management team to oversee the affairs of the hospital through this period